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BUSINESS REGULATIONS AND PROCEDURES

Saudi Arabia  pursues  a  liberal  trade  policy  with  no  quantitative  or  price restrictions for importers.  However, there  are a  number of  regulations and  procedures  governing  business and trade  in  the Kingdom and  adherence  thereto could be  very  helpful for  those  intending to do business with Saudi Arabia.

Custom Duties

            The Kingdom of Saudi Arabia applies the Harmonised Customs System. The customs duties are calculated Ad valorem on the C.I.F value. However, some products are subject to taxes based on the weight or the volume. Saudi Arabia has assessed out its customs tariff on the basis of the General Products Nomenclature (GPN), stemming from the International Convention on the harmonized goods description and codification system.

            Saudi Arabia accepted as a member of the GCC Unified Customs Union along with Bahrain, Kuwait, Oman, Qatar, and the United Arab Emirates as on 01 January 2003 brought the rates of import duty to a uniform 5% on most of the items.  Within the GCC, goods with at least 40 per cent of their value added internally are completely free of tariffs.  

            The basic rate is 12%. Most of the basic consumer goods (sugar, rice, tea, coffee (not moulded), wheat, living animals are exempted from taxes. To protect the rising national industry, a 20% tax is applied for some products such as steel, cement, furniture, organic and liquid detergents as well as some electrical items. On the other hand, products such as tobacco are taxed at a rate of 30%.

            Some Saudi industries are protected by the imposition of 20% import duties on certain commodities. Most consumer goods, however, are duty-free. Other items carry duties of 12% of the total cost, which includes insurance and freight.

            In line with Saudi government directives and in order to assist Saudi business, contractors must buy equipment and materials from a Saudi importer or manufacturer. If supplies are not available locally, the contractors are allowed to import from foreign sources. Tariff rates vary from zero to 4%.

            Items which are produced in the Kingdom, such as aluminum or wooden frames, are assessed at an import tariff of 20%. In most cases, however, contracts provide for the import of supplies and machinery duty-free.

            Goods are usually cleared quickly through customs at Saudi seaports. Original export documents should be stamped and attested to by Saudi consular authorities in the country of origin. This will make clearing customs far easier.

 Any kind of business with Israel or with companies having commercial links with Israel is prohibited.

According to Royal Decree No. M/13 dated 10.5.1480 H, corresponding to 30/12/1987, and to the Saudi Council of Ministers order No.86 dated 10/5/1408H (19/12/87), the following customs duties/rates have been in effect since 13/5/1408H (corresponding to January 2, 1988)

v     Most of the basic consumer products are duty free, e.g. sugar, rice, tea, unroasted coffee, cardamom, barley, corn, livestock and meat (fresh frozen)

v     Customs duties of 20% are imposed on some imported commodities for the purpose of   protecting the national infant industries.

v     Import duty on other items is 12% ad valorem on the cost, insurance and freight (cif) value.

v     A limited number of items are subject to customs duties calculated on the basis of metric weight or capacity, rather than ad valorem. However the rates for these items are fairly low.

v     Members of the Arab league who are signatories to the agreement to facilitate trade and exchange and to organize transit between the Arab League States are granted special concessions.

v     Imports from the Arab States with which Saudi Arabia has bilateral the trade agreements are entitled to further reductions of duty.

Royal Decree No. M/56 dated 19/10/1470H, corresponding to June 15, 1987, has approved the International Brussels Agreement of 14 June 1983, on the Harmonized Commodity Description and Coding System (HS). According to the Minister of Finance and National Economy Order No. 3/1805 date 19/10/1410H, corresponding to May 14, 1990; the kingdom has been implementing the Harmonized System since 15/6/1411H, corresponding to 1/1/1991.

In a far reaching decision towards liberalization of foreign trade, to stimulate growth and make the economy competitive, vide a Resolution of the Ministerial Council No. 72 dated 5.3.1422H, topped by Royal Decree No. Meem/10 dated 5.3.1422, corresponding to 28.5.2001, the Saudi Government reduced the custom duties on all commodities that fall in 12% and 7% categories to 5 percent, with exception of the following, with effect from 29th May, 2001.

The  lowering of customs duties are part of a move to implement the customs union for the six GCC members, Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates, by 2005.

v     The commodity protected for industrial purposes and fall under the category of 20% duty.

v     The commodity protected for health purpose and fall under the category of 100%  duty.

v     Wheat flour, dates, long-life milk packed in more than one liter of the pack and fall in the category of 100% duty.

In a review of the above decision, the Council of Ministers approved in November 2001, the Supreme Economic Council (SEC) resolution to impose 12% customs duty on certain imported commodities to protect similar locally produced goods.

For detailed information on duties levied on different products, users are advised to log on to our website http://www.cgijeddah.com and click on Commercial Section.

Website: http://www.saudi-customs.net/default2.htm

Import Standards & Procedures

Saudi Arabian Standards Organization (SASO) formulates national standards for all commodities and products as well as standards concerned with metrology, calibration, making and identification of commodities and products, methods or sampling and inspection and testing.

In November 1995, the Saudi Ministry of Commerce implemented the International Conformity Certification Programme (ICCP) in coordination with SASO.  SASO relies primarily on international standards when issuing Saudi specifications, and SASO specification conformity is applied to all products, both locally produced and imported, to provide the necessary consumer protection.  All of the approved SASO procedures, including the ICCP programme, work within the guidelines of the International Standards Organization.

SASO, in addition to country offices, has authorized Regional Licensing Centers to administer the registration process, carry out verification of conformity and issue SASO Type approval licenses.  In some cases, the SASO Country Office will also require random sampling of the products and testing.

Some of the Prohibited and Restrictive Import Products

The procedure for obtaining a Certificate of Conformity

v     The exporter submits a written request to the appropriate SASO Country office for inspection and testing of the products requiring a Certificate of Conformity, together with full details of the consignment.

v     The Country Office completes the necessary steps appropriate to the product in order to meet SASO requirements.  These steps will depend upon existing product certifications and whether the product is covered by a valid registration, as well as the frequency with which the product is exported.  If the products are registered, the Country Office will set up an inspection plan, which may or may not require products to be sampled for testing.

v     If the products are not registered, they will be sampled and tested according to SASO requirements. Assuming the testing and/or inspection produces satisfactory compliance results; a Certificate of Conformity is issued.  The Certificate should accompany the shipping documents.

v     If the products do not meet the SASO requirements, the exporter will be given a complete explanation of the deficiency.  If acceptable corrective action is not taken, no Certificate will be issued and the Ministry of Commerce, SASO representatives and the importer will be advised accordingly.

v     When the shipment arrives at the port of entry in the Kingdom, the Ministry of Commerce and SASO will request the accompanying Certificate of Conformity.  Each certificate will be checked for authenticity and matching details.  After satisfactory checks, SASO will issue a letter of release.